Why can’t government use its power to force equality?
What are some real problems with Marxism’s idealistic theories?
Does Capitalism really exploit the weak?
This video is a great short lesson in answering these questions:
Bob And His Apples
How can saving money be the same as spending it? What? Do you think the banker just hides your savings in a big vault until you want it back? In a normal and healthy economy your money would be put to use doing things like building stuff, or digging and exploring for new resources, or all sorts of things like that. It would in fact be working just as if you had spent it. What you are putting in the bank, you see, represents value: which is your work. But rather than consume the fruits of your labor right away, you forego that satisfaction and save. This means that the currency that represents something of value, your labor, is used for other enterprises. Those other enterprises involve profits, of which you get a little, (interest) the banker gets a little, (interest) and the one who borrowed it gets a little. (profit)
Don’t be an economic moron. Take the time to watch this short video to understand how we are all much better off with a true banking system, and not just a spigot with a money printer at the other end.
Hat tip: Austrian Economics Addict
When a person buys a loaf of bread he probably has no idea how the price of that bread came to be. He notices when it is different from last week. Some may have a vague idea that it is being impacted by inflation, whatever that is. Yet prices, and how they are set, are central to economics.
While it wouldn’t make economic sense to drive around comparing bread prices to save 2 cents, it would make sense on something that saved, say, hundreds of dollars. And, as one might suspect, people do generally drive around looking for the best deal on a new car. Consequently, the lowest priced dealership sells more cars.
We experience the same thing as sellers. We must offer what we are selling for a competitive price or no one will buy it. However, most don’t see themselves as sellers even though that is exactly what’s happening when someone’s looking for a job. He is offering to sell his back or brains. That’s also why someone who can do brain surgery is able to sell his services for much more than someone who can cut your grass. If brain surgery knowledge and skill were as easy to come by as lawn mowing knowledge and skill, why you could probably have that tumor removed for 30 bucks.
But what if a politician sets prices on bread, cars and brain surgery? What would he set them at? How would he be able to know the intricate and myriad details of availability, want, and how his price will affect both? The answer is that he can’t. But that won’t stop him from trying because he’s a politician, and as such he’s selling you something in his own right, which is a line. It’s much easier to legislate the illusion of wealth than it is to create it, and sadly, man never tires of buying the line that such can be done.
The last half-century has been marked by a shift in the meaning of the word morality in Western Civilizations. It has been slowly transitioning from an objective to a subjectively based word. What is considered to be good and evil has increasingly become dependent on one’s on opinion and less on objective and absolute standards. One may now feel justified in defaulting on a contract simply because, in his judgement, the other person or entity is rich and doesn’t really need the money. This mindset, when predominate, does not foster a robust economy.
Consequently, this shift has increasingly hindered economic activity over time because economics is based on millions of transactions. Contracts are signed. Trust is placed in others. It is agreed that if you do this then I will do that. As trust erodes so does the ability for the life-blood of an economy, commerce, to happen freely. Rather contracts are broken, defaults abound and lawyers celebrate. In the end, the economy suffers, and so do the people.
Unfortunately for society, the drag that immorality places on commerce doesn’t stop with the individual participant. The immorality of corruption leaches upward from an immoral society into the governing authorities. This also impedes an economy as unreasonable demands are made on the participants in commerce by those authorities. Resources are then squandered on excessive taxation, bribes, excessive regulation and delays.
This adds up to the siphoning of resources which would have otherwise led to higher standards of living for the population. If you’ve ever wondered why the people of some nations struggle to eat while living their lives on ground that is abounding with resources, one need to look no further than endemic corruption.
So what does morality have to do with economics? In a word, everything.
Government accomplishes more by tax rates than filling it’s coffers, which is kind of funny these days when you think about it because the government coffer is brimming over with I.O.U’s.